FRP HOLDINGS, INC. - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

[X ]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

[_]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________ to _________

Commission File Number: 001-36769

_____________________

FRP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_____________________

Florida		47-2449198
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 W. Forsyth St., 7th Floor, Jacksonville, FL		32202
(Address of principal executive offices)		(Zip Code)

904-396-5733

(Registrant’s telephone number, including area code)

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $.10 par value		FRPH		NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [_]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x] No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [_]		Accelerated filer [_]
Non-accelerated filer [x]		Smaller reporting company [x]
Emerging growth company [_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [x]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Class				Outstanding at August 12, 2022
	Common Stock, $.10 par value per share				9,455,096 shares

FRP HOLDINGS, INC.

FORM 10-Q

QUARTER ENDED JUNE 30, 2022

CONTENTS

Page No.

Preliminary Note Regarding Forward-Looking Statements		3

	Part I. Financial Information

Item 1.	Financial Statements
	Consolidated Balance Sheets	4
	Consolidated Statements of Income	5
	Consolidated Statements of Comprehensive Income	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Shareholders’ Equity	8
	Condensed Notes to Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	35

Item 4.	Controls and Procedures	35

	Part II. Other Information

Item 1A.	Risk Factors	35

Item 2.	Purchase of Equity Securities by the Issuer	36

Item 6.	Exhibits	36

Signatures		37

Exhibit 31	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	39

Exhibit 32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	42

Preliminary Note Regarding Forward-Looking Statements.

This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by us, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. Such statements reflect management’s current views with respect to financial results related to future events and are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial or otherwise, may differ, perhaps materially, from the results discussed in the forward-looking statements. Risk factors discussed in Item 1A of this Form 10-K and other factors that might cause differences, some of which could be material, include, but are not limited to: the impact of the Covid-19 Pandemic on our operations and financial results; the possibility that we may be unable to find appropriate investment opportunities; levels of construction activity in the markets served by our mining properties; demand for flexible warehouse/office facilities in the Baltimore-Washington-Northern Virginia area; demand for apartments in Washington D.C., Richmond, Virginia and Greenville, South Carolina; our ability to obtain zoning and entitlements necessary for property development; the impact of lending and capital market conditions on our liquidity, our ability to finance projects or repay our debt; general real estate investment and development risks; vacancies in our properties; risks associated with developing and managing properties in partnership with others; competition; our ability to renew leases or re-lease spaces as leases expire; illiquidity of real estate investments; bankruptcy or defaults of tenants; the impact of restrictions imposed by our credit facility; the level and volatility of interest rates; environmental liabilities; inflation risks; cyber security risks; as well as other risks listed from time to time in our SEC filings, including but not limited to, our annual and quarterly reports. We have no obligation to revise or update any forward-looking statements, other than as imposed by law, as a result of future events or new information. Readers are cautioned not to place undue reliance on such forward-looking statements. Additional information regarding these and other risk factors may be found in the Company’s other filings made from time to time with the Securities and Exchange Commission.

PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands, except share data)

	June 30, 2022			December 31, 2021
Assets:
Real estate investments at cost:
Land	$	135,139			123,397
Buildings and improvements		268,156			265,278
Projects under construction		11,149			8,668
Total investments in properties		414,444			397,343
Less accumulated depreciation and depletion		51,889			46,678
Net investments in properties		362,555			350,665

Real estate held for investment, at cost		9,969			9,722
Investments in joint ventures		139,655			145,443
Net real estate investments		512,179			505,830

Cash and cash equivalents		159,262			161,521
Cash held in escrow		765			752
Accounts receivable, net		1,423			793
Investments available for sale at fair value		—			4,317
Federal and state income taxes receivable		—			1,103
Unrealized rents		806			620
Deferred costs		2,065			2,726
Other assets		540			528
Total assets	$	677,040			678,190

Liabilities:
Secured notes payable	$	178,483			178,409
Accounts payable and accrued liabilities		4,815			6,137
Other liabilities		1,886			1,886
Federal and state income taxes payable		398			—
Deferred revenue		223			369
Deferred income taxes		64,180			64,047
Deferred compensation		1,307			1,302
Tenant security deposits		811			790
Total liabilities		252,103			252,940

Commitments and contingencies		—			—

Equity:
Common stock, $.10 par value 25,000,000 shares authorized, 9,455,096 and 9,411,028 shares issued and outstanding, respectively		945			941
Capital in excess of par value		58,872			57,617
Retained earnings		339,081			337,752
Accumulated other comprehensive income (loss), net		(1,096	)		113
Total shareholders’ equity		397,802			396,423
Noncontrolling interest MRP		27,135			28,827
Total equity		424,937			425,250
Total liabilities and equity	$	677,040			678,190

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share amounts)

(Unaudited)


	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,
	2022			2021			2022			2021
Revenues:
Lease revenue	$	6,745			5,861			13,027			9,399
Mining lands lease revenue		2,883			2,634			5,308			4,949
Total Revenues		9,628			8,495			18,335			14,348

Cost of operations:
Depreciation, depletion and amortization		2,868			4,388			5,766			5,831
Operating expenses		1,541			1,394			3,349			2,235
Property taxes		1,041			1,000			2,069			1,778
Management company indirect		805			822			1,579			1,392
Corporate expenses (Note 4 Related Party)		1,307			1,050			2,142			1,829
Total cost of operations		7,562			8,654			14,905			13,065

Total operating profit (loss)		2,066			(159	)		3,430			1,283

Net investment income		1,120			1,048			2,018			2,423
Interest expense		(739	)		(446	)		(1,477	)		(1,371	)
Equity in loss of joint ventures		(1,766	)		(1,118	)		(3,370	)		(2,753	)
Gain on remeasurement of investment in real estate partnership		—			—			—			51,139
Gain on sale of real estate		—			805			733			805

Income before income taxes		681			130			1,334			51,526
Provision for (benefit from) income taxes		99			(151	)		348			10,370

Net income		582			281			986			41,156
Gain (loss) attributable to noncontrolling interest		(75	)		199			(343	)		12,701
Net income attributable to the Company	$	657			82			1,329			28,455

Earnings per common share:
Net income attributable to the Company-
Basic	$	0.07			0.01			0.14			3.04
Diluted	$	0.07			0.01			0.14			3.03

Number of shares (in thousands) used in computing:
-basic earnings per common share		9,384			9,353			9,375			9,347
-diluted earnings per common share		9,424			9,390			9,416			9,385

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands except per share amounts)

(Unaudited)


	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,
	2022			2021			2022			2021
Net income	$	582			281			986			41,156
Other comprehensive income net of tax:
Unrealized loss on investments sale, net of income tax effect of $(133), $(61), $(448) and $(151)		(359	)		(165	)		(1,209	)		(407	)

Comprehensive income	$	223			116			(223)			40,749

Less comp. income attributable to Noncontrolling interest	$	(75	)		199			(343	)		12,701

Comprehensive income (loss) attributable to the Company	$	298			(83	)		120			28,048

See accompanying notes

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(In thousands) (Unaudited)

	2022			2021
Cash flows from operating activities:
Net income	$	986			41,156
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		5,890			5,951
Deferred income taxes		133			9,273
Equity in loss of joint ventures		3,370			2,753
Gain on remeasurement of invest in real estate partnership		—			(51,139	)
Gain on sale of equipment and property		(733	)		(835	)
Stock-based compensation		1,026			854
Net changes in operating assets and liabilities:
Accounts receivable		(630	)		554
Deferred costs and other assets		(1,294	)		280
Accounts payable and accrued liabilities		(1,468	)		819
Income taxes payable and receivable		1,501			940
Other long-term liabilities		26			357
Net cash provided by operating activities		8,807			10,963

Cash flows from investing activities:
Investments in properties		(17,411	)		(6,845	)
Investments in joint ventures		(4,261	)		(4,768	)
Return of capital from investments in joint ventures		6,677			17,119
Proceeds from sales of investments available for sale		4,317			42,502
Cash at consolidation of real estate partnership		—			3,704
Proceeds from the sale of assets		741			878
Cash held in escrow		(13	)		(152	)
Net cash (used in) provided by investing activities		(9,950	)		52,438

Cash flows from financing activities:
Proceeds from long-term debt		—			92,070
Repayment of long-term debt		—			(90,000	)
Debt issue costs		—			(704	)
Distribution to noncontrolling interest		(1,349	)		(527	)
Repurchase of company stock		—			(264	)
Exercise of employee stock options		233			269
Net cash (used in) provided by financing activities		(1,116	)		844

Net increase (decrease) in cash and cash equivalents		(2,259	)		64,245
Cash and cash equivalents at beginning of year		161,521			73,909
Cash and cash equivalents at end of the period	$	159,262			138,154

Supplemental disclosure of cash flow information:
Cash paid (received) during the period for:
Interest		1,475			1,370
Income taxes		(1,734	)		7

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(In thousands, except share amounts) (Unaudited)


												Accumulated
												Other Comp-			Total
						Capital in						rehensive			Share			Non-
	Common Stock					Excess of			Retained			Income			holders’			Controlling			Total
	Shares			Amount		Par Value			Earnings			(loss), net			Equity			Interest			Equity
Balance at April 1, 2022		9,431,994		$	943	$	57,812		$	338,424		$	(737	)	$	396,442		$	27,788		$	424,230
Stock option grant compensation		—			—		17			—			—			17			—			17
Restricted stock compensation		—			—		162			—			—			162			—			162
Shares granted to employees
Restricted stock award
Shares granted to Directors		11,232			1		649			—			—			650			—			650
Forfeiture of restricted stock award
Exercise of stock options		11,870			1		232			—			—			233			—			233
Net income		—			—		—			657			—			657			(75	)		582
Distributions to partners		—			—		—			—			—			—			(578	)		(578	)
Unrealized loss on investment, net		—			—		—			—			(359	)		(359	)		—			(359	)
Balance at June 30, 2022		9,455,096		$	945	$	58,872		$	339,081		$	(1,096	)	$	397,802		$	27,135		$	424,937

Balance at January 1, 2022		9,411,028		$	941	$	57,617		$	337,752		$	113		$	396,423		$	28,827		$	425,250
Stock option grant compensation		—			—		34			—			—			34			—			34
Restricted stock compensation		—			—		292			—			—			292			—			292
Shares granted to Employees		865			—		50			—			—			50			—			50
Restricted stock award		21,464			2		(2	)		—			—			—			—			—
Shares granted to Directors		11,232			1		649			—			—			650			—			650
Forfeiture of restricted stock award		(1,363	)		—		—			—			—			—			—			—
Exercise of stock options		11,870			1		232			—			—			233			—			233
Net income		—			—		—			1,329			—			1,329			(343	)		986
Distributions to partners		—			—		—			—			—			—			(1,349	)		(1,349	)
Unrealized loss on investment, net		—			—		—			—			(1,209	)		(1,209	)		—			(1,209	)
Balance at June 30, 2022		9,455,096		$	945	$	58,872		$	339,081		$	(1,096	)	$	397,802		$	27,135		$	424,937

Balance at April 1, 2021		9,387,823		$	939	$	56,474		$	337,910		$	433		$	395,756		$	31,879		$	427,635
Stock option grant compensation		—			—		18			—			—			18			—			18
Restricted stock compensation		—			—		134			—			—			134			—			134
Shares granted to employees
Restricted stock award
Shares granted to Directors		9,105			1		499			—			—			500			—			500
Forfeiture
Exercise of stock options		14,100			1		235			—			—			236			—			236
Contributions from partners		—			—		—			—			—			—			3			3
Net income		—			—		—			82			—			82			199			281
Distributions to partners		—			—		—			—			—			—			(357	)		(357	)
Unrealized loss on investment, net		—			—		—			—			(165	)		(165	)		—			(165	)
Balance at June 30, 2021		9,411,028		$	941	$	57,360		$	337,992		$	268		$	396,561		$	31,724		$	428,285

Balance at January 1, 2021		9,363,717		$	936	$	56,279		$	309,764		$	675		$	367,654		$	14,999		$	382,653

Stock option grant compensation		—			—		35			—			—			35			—			35
Restricted stock compensation		—			—		269			—			—			269			—			269
Shares granted to Employees		1,098			—		50			—			—			50			—			50
Restricted stock award		27,778			3		(3	)		—			—			—			—			—
Shares granted to Directors		9,105			1		499			—			—			500			—			500
Exercise of stock options		15,334			1		268			—			—			269			—			269
Shares purchased and cancelled		(6,004	)		—		(37	)		(227	)		—			(264	)		—			(264	)
Contributions from partners		—			—		—			—			—			—			4,551			4,551
Net income		—			—		—			28,455			—			28,455			12,701			41,156
Distributions to partners		—			—		—			—			—			—			(527	)		(527	)
Unrealized loss on investment, net		—			—		—			—			(407	)		(407	)		—			(407	)
Balance at June 30, 2021		9,411,028		$	941	$	57,360		$	337,992		$	268		$	396,561		$	31,724		$	428,285

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

(Unaudited)

(1) Description of Business and Basis of Presentation.

FRP Holdings, Inc. is a holding company engaged in various real estate businesses, namely (i) mining royalty land ownership and leasing, (ii) land acquisition, entitlement and development primarily for future warehouse/office or residential building construction, (iii) ownership, leasing, and management of residential apartment buildings, and (iv) warehouse/office building ownership, leasing and management.

The accompanying consolidated financial statements include the accounts of FRP Holdings, Inc. (the “Company” or “FRP”) inclusive of our operating real estate subsidiaries, FRP Development Corp. (“Development”) and Florida Rock Properties, Inc. (“Properties”), Riverfront Investment Partners I, LLC, and commencing March 31, 2021 also Riverfront Investment Partners II, LLC (See Note 12). Our investment in the Brooksville joint venture, BC FRP Realty joint venture, Riverfront Investment Partners II, LLC prior to March 31, 2021, Bryant Street Partnerships, 1800 Half Street and Greenville/Woodfield are accounted for under the equity method of accounting (See Note 11). Our ownership of Riverfront Investment Partners I, LLC and Riverfront Investment Partners II, LLC includes a non-controlling interest representing the ownership of our partner. The Company uses the cost method to account for its investment in DST Hickory Creek because it does not have significant influence over operating and financial policies.

These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (primarily consisting of normal recurring accruals) considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The accompanying consolidated financial statements and the information included under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the Company's consolidated financial statements and related notes included in the Company’s Form 10-K for the year ended December 31, 2021.

(2) Recently Issued Accounting Standards.

None.

(3) Business Segments.

The Company is reporting its financial performance based on four reportable segments, Asset Management, Mining Royalty Lands, Development and Stabilized Joint Venture, as described below.

The Asset Management segment owns, leases and manages commercial properties. During the fourth quarter of 2021 we completed construction on two buildings in our Hollander Business Park which were subsequently added to this segment.

Our Mining Royalty Lands segment owns several properties comprising approximately 16,650 acres currently under lease for mining rents or royalties (this does not include the 4,280 acres owned in our Brooksville joint venture with Vulcan Materials). Other than one location in Virginia, all of these properties are located in Florida and Georgia.

Through our Development segment, we own and are continuously assessing for their highest and best use for several parcels of land that are in various stages of development. Our overall strategy in this segment is to convert all of our non-income producing lands into income production through (i) an orderly process of constructing new buildings for us to own and operate or (ii) a sale to, or joint venture with, third parties. Additionally, our Development segment will form joint ventures on new developments of land not previously owned by the Company.

The Stabilized Joint Venture segment includes joint ventures which own, lease and manage buildings that have met our initial lease up criteria. Two of our joint ventures in the segment, Riverfront Investment Partners I, LLC (“Dock 79”) and Riverfront Investment Partners II, LLC (“The Maren”) are consolidated. The Maren was consolidated effective March 31, 2021 and prior periods are still reflected under the equity method. The ownership of Dock 79 and The Maren (commencing March 31, 2021) attributable to our partner MidAtlantic Realty Partners, LLC (MRP) is reflected on our consolidated balance sheet as a noncontrolling interest. Such noncontrolling interests are reported on the Consolidated Balance Sheets within equity but separately from shareholders' equity. On the Consolidated Statements of Income, all of the revenues and expenses from Dock 79 are reported in net income, including both the amounts attributable to the Company and the noncontrolling interest. The Maren is reflected in Equity in loss of joint ventures on the Consolidated Statements of Income for the periods up to March 31, 2021 but is reflected like Dock 79 for periods commencing April 1, 2021. The amounts of consolidated net income attributable to the noncontrolling interest is clearly identified on the accompanying Consolidated Statements of Income.

Operating results and certain other financial data for the Company’s Business Segments are as follows (in thousands):


		Three Months ended						Six Months ended
		June 30,						June 30,
		2022			2021			2022			2021
	Revenues:
Revenues	Asset management	$	912			588			1,751			1,300
Revenues	Mining royalty lands		2,883			2,634			5,308			4,949
Revenues	Development		408			451			791			768
Revenues	Stabilized Joint Venture		5,425			4,822			10,485			7,331
Revenues			9,628			8,495			18,335			14,348

	Operating profit (loss):
	Before corporate expenses:
Operating profit before corporate expenses	Asset management	$	419			128			711			359
Operating profit before corporate expenses	Mining royalty lands		2,498			2,400			4,681			4,494
Operating profit before corporate expenses	Development		(581	)		(411	)		(1,299	)		(797	)
Operating profit before corporate expenses	Stabilized Joint Venture		1,037			(1,226	)		1,479			(944	)
Operating profit before corporate expenses	Operating profit before corporate expenses		3,373			891			5,572			3,112
	Corporate expenses:
Corporate expenses	Allocated to asset management		(225	)		(288	)		(369	)		(502	)
Corporate expenses	Allocated to mining royalty lands		(148	)		(108	)		(242	)		(189	)
Corporate expenses	Allocated to development		(816	)		(522	)		(1,337	)		(941	)
Corporate expenses	Allocated to stabilized joint venture		(118	)		(132	)		(194	)		(197	)
Corporate expenses	Total corporate expenses		(1,307	)		(1,050	)		(2,142	)		(1,829	)
Corporate expenses		$	2,066			(159	)		3,430			1,283

Interest expense	Interest expense	$	739			446			1,477			1,371

	Depreciation, depletion and amortization:
Depreciation, depletion and amortization	Asset management	$	230			134			464			271
Depreciation, depletion and amortization	Mining royalty lands		189			58			244			123
Depreciation, depletion and amortization	Development		47			53			92			106
Depreciation, depletion and amortization	Stabilized Joint Venture		2,402			4,143			4,966			5,331
Depreciation, depletion and amortization		$	2,868			4,388			5,766			5,831
	Capital expenditures:
Capital expenditures	Asset management	$	145			139			595			218
Capital expenditures	Mining royalty lands		11,126			—			11,217			—
Capital expenditures	Development		2,426			2,907			5,379			6,206
Capital expenditures	Stabilized Joint Venture		78			412			220			421
Capital expenditures		$	13,775			3,458			17,411			6,845

Indentifiable net assets

			June 30,	December 31,
	Identifiable net assets		2022	2021

Assets	Asset management	$	24,340	23,897
Assets	Mining royalty lands		48,835	37,627
Assets	Development		175,925	176,386
Assets	Stabilized Joint Venture		261,594	266,429
Investments available for sale	Investments available for sale at fair value		—	4,317
Cash	Cash items		160,027	162,273
Assets	Unallocated corporate assets		6,319	7,261
Assets		$	677,040	678,190

(4) Related Party Transactions.

The Company is a party to an Administrative Services Agreement which resulted from our January 30, 2015 spin-off of Patriot Transportation Holding, Inc. (Patriot). The Administrative Services Agreement sets forth the terms on which Patriot will provide to FRP certain services that were shared prior to the Spin-off, including the services of certain shared executive officers. The boards of the respective companies amended and extended this agreement for one year effective April 1, 2022.

The consolidated statements of income reflect charges and/or allocation from Patriot for these services of $224,000 and $256,000 for the three months ended June 30, 2022 and 2021 and $447,000 and $512,000 for the six months ended June 30, 2022 and 2021, respectively. These charges are reflected as part of corporate expenses.

To determine these allocations between FRP and Patriot as set forth in the Administrative Services Agreement, we employ an allocation method to allocate said expenses and thus we believe that the allocations to FRP are a reasonable approximation of the costs related to FRP’s operations, but any such related-party transactions cannot be presumed to be carried out on an arm’s-length basis.

(5) Long-Term Debt.

The Company’s Outstanding debt, net of unamortized debt issuance costs, consisted of the following (in thousands):

	June 30,			December 31,
	2022			2021
Fixed rate mortgage loans, 3.03% interest only, matures 4/1/2033	$	180,070			180,070
Unamortized debt issuance costs		(1,587	)		(1,661	)
Credit agreement		—			—
Long term debt	$	178,483			178,409

On February 6, 2019, the Company entered into a First Amendment to the 2015 Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A. (“Wells Fargo”), effective February 6, 2019. The Credit Agreement modifies the Company’s prior Credit Agreement with Wells Fargo dated January 30, 2015. The Credit Agreement establishes a five-year revolving credit facility with a maximum facility amount of $20 million. The interest rate under the Credit Agreement will be a maximum of 1.50% over Daily 1-Month LIBOR, which may be reduced quarterly to 1.25% or 1.0% over Daily 1-Month LIBOR if the Company meets a specified ratio of consolidated debt to consolidated total capital, as defined which excludes FRP Riverfront. A commitment fee of 0.25% per annum is payable quarterly on the unused portion of the commitment but the amount may be reduced to 0.20% or 0.15% if the Company meets a specified ratio of consolidated total debt to consolidated total capital. The Credit Agreement contains certain conditions, affirmative financial covenants and negative covenants. As of June 30, 2022, there was no debt outstanding on this revolver, $506,000 outstanding under letters of credit and $19,494,000 available for borrowing. The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development. Most of the letters of credit are irrevocable for a period of one year and typically are automatically extended for additional one-year periods. The letter of credit fee is 1% and applicable interest rate would have been

2.71314% on June 30, 2022. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of June 30, 2022, these covenants would have limited our ability to pay dividends to a maximum of $246 million combined.

On November 17, 2017, Dock 79 borrowed a principal sum of $90,000,000 pursuant to a Loan Agreement and Deed of Trust Note entered into with EagleBank. The loan was secured by the Dock 79 real property and improvements, bore a fixed interest rate of 4.125% per annum and had a term of 120 months. The loan was paid in full on March 19, 2021. A prepayment penalty of $900,000 was recorded into interest expense in the quarter ending March 31, 2021.

Effective March 31, 2021, the Company consolidated the assets (at current fair value), liabilities and operating results of our Riverfront Investment Partners II, LLC partnership (“The Maren”) which was previously accounted for under the equity method. As such the full amount of our mortgage loan was recorded in the consolidated financial statements.

On March 19, 2021, the Company refinanced Dock 79 and The Maren projects pursuant to separate Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association of America, LLC. Dock 79 and The Maren borrowed principal sums of $92,070,000 and $88,000,000 respectively, in connection with the refinancing. The loans are separately secured by the Dock 79 and The Maren real property and improvements, bear a fixed interest rate of 3.03% per annum, and require monthly payments of interest only with the principal in full due April 1, 2033. Either loan may be prepaid subsequent to April 1, 2024, subject to yield maintenance premiums. Either loan may be transferred to a qualified buyer as part of a one-time sale subject to a 60% loan to value, minimum of 7.5% debt yield and a 0.75% transfer fee.

Debt cost amortization of $37,000 and $38,000 was recorded during the three months ended June 30, 2022 and 2021 and $74,000 and $76,000 during the six months ended June 30, 2022 and 2021, respectively. During the three months ended June 30, 2022 and June 30, 2021 the Company capitalized interest costs of $672,000 and $966,000, respectively. During the six months ended June 30, 2022 and June 30, 2021 the Company capitalized interest costs of $1,346,000 and $1,894,000, respectively.

The Company was in compliance with all debt covenants as of June 30, 2022.

(6) Earnings per Share.

The following details the computations of the Basic and diluted earnings per common share (in thousands, except per share amounts):


	Three Months ended				Six Months ended
	June 30,				June 30,
	2022		2021		2022		2021
Weighted average common shares outstanding during the period – shares used for basic earnings per common share		9,384		9,353		9,375		9,347

Common shares issuable under share based payment plans which are potentially dilutive		40		37		41		38

Common shares used for diluted earnings per common share		9,424		9,390		9,416		9,385

Net income attributable to the Company	$	657		82		1,329		28,455

Earnings per common share:
-basic	$	0.07		0.01		0.14		3.04
-diluted	$	0.07		0.01		0.14		3.03

For the three and six months ended June 30, 2022, the Company did not have any outstanding anti-dilutive stock options. For the three and six months ended June 30, 2021, 6,680 and 19,950 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

During the first six months of 2021 the Company repurchased 6,004 shares at an average cost of $43.95.

(7) Stock-Based Compensation Plans.

The Company has two Stock Option Plans (the 2006 Stock Incentive Plan and the 2016 Equity Incentive Option Plan) under which options for shares of common stock were granted to directors, officers and key employees. The 2016 plan permits the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, or stock awards. The options awarded under the plans have similar characteristics. All stock options are non-qualified and expire ten years from the date of grant. Stock based compensation awarded to directors, officers and employees are exercisable immediately or become exercisable in cumulative installments of 20% or 25% at the end of each year following the date of grant. When stock options are exercised, the Company issues new shares after receipt of exercise proceeds and taxes due, if any, from the grantee.

The Company utilizes the Black-Scholes valuation model for estimating fair value of stock compensation for options awarded to officers and employees. Each grant is evaluated based upon assumptions at the time of grant. The assumptions were no dividend yield, expected volatility between 29% and 41%, risk-free interest rate of 1.4% to 2.9% and expected life of 3.0 to 7.0 years.

The dividend yield of zero is based on the fact that the Company does not pay cash dividends and has no present intention to pay cash dividends. Expected volatility is estimated based on the Company’s historical experience over a period equivalent to the expected life in years. The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate at the date of grant with a term consistent with the expected life of the options granted. The expected life calculation is based on the observed and expected time to exercise options by the employees.

In January 2022, 7,448 shares of restricted stock were granted to employees that will vest over the next four years. In January 2022, 14,016 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. In January 2021, 8,896 shares of restricted stock were granted to employees that will vest over the next four years. In January 2021, 18,882 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. In March 2022 and March 2021, 865 and 1,098 shares of stock, respectively, were granted to employees. In March 2020, 20,520 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. The number of common shares available for future issuance was 366,723 at June 30, 2022.

The Company recorded the following Stock compensation expense in its consolidated statements of income (in thousands):


	Three Months ended				Six Months ended
	June 30,				June 30,
	2022		2021		2022		2021
Stock option grants	$	17		18		34		35
Restricted stock awards		162		134		292		269
Employee stock grant		—		—		50		50
Annual director stock award		650		500		650		500
Stock compensation	$	829		652		1,026		854

A Summary of changes in outstanding options is presented below (in thousands, except share and per share amounts):

				Weighted		Weighted	Weighted
	Number			Average		Average	Average
	Of			Exercise		Remaining	Grant Date
Options	Shares			Price		Term (yrs)	Fair Value(000's)

Outstanding at January 1, 2022		104,755		$	37.93	4.8	$	1,416
Exercised		(11,870	)	$	19.69		$	(100	)
Outstanding at June 30, 2022		92,885		$	40.27	4.9	$	1,316

Exercisable at June 30, 2022		84,716		$	39.72	4.7	$	1,181

Vested during six months ended June 30, 2022		—					$	—

The aggregate intrinsic value of exercisable in-the-money options was $1,748,000 and the aggregate intrinsic value of outstanding in-the-money options was $1,865,000 based on the market closing price of $60.35 on June 30, 2022 less exercise prices.

The unrecognized compensation cost of options granted to FRP employees but not yet vested as of June 30, 2022 was $94,000, which is expected to be recognized over a weighted-average period of 1.4 years.

A Summary of changes in restricted stock awards is presented below (in thousands, except share and per share amounts):

				Weighted		Weighted	Weighted
	Number			Average		Average	Average
	Of			Exercise		Remaining	Grant Date
Restricted stock	Shares			Price		Term (yrs)	Fair Value(000's)

Non-vested at January 1, 2022		46,074		$	45.88	3.1	$	2,114
Time-based awards granted		7,448			57.80			431
Performance-based awards granted		14,016			57.80			810
Vested		(7,813	)		46.30			(362	)
Forfeited		(1,363	)		46.30			(63	)
Non-vested at June 30, 2022		58,362		$	50.20	3.4	$	2,930

Total unrecognized compensation cost of restricted stock granted but not yet vested as of June 30, 2022 was $2,144,000 which is expected to be recognized over a weighted-average period of 3.5 years.

(8) Contingent Liabilities.

The Company may be involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage. In the opinion of management, none of these matters are expected to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company is subject to numerous environmental laws and regulations. The Company believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no assurance that previous environmental studies with respect to its properties have revealed all potential environmental contaminants; that any previous owner, occupant or tenant did not create any material environmental condition not known to the Company; that the current environmental condition of the properties will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third

parties; and that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.

As of June 30, 2022, there was $506,000 outstanding under letters of credit. The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development.

The Company and MRP guaranteed $26 million of the construction loan on the Bryant Street Partnerships in exchange for a 1% lower interest rate. The Company and MRP have a side agreement limiting the Company’s guarantee to its proportionate ownership. The value of the guarantee was calculated at $1.9 million based on the present value of the 1% interest savings over the anticipated 48-month term. This amount is included as part of the Company’s investment basis and is amortized to expense over the 48 months. The Company will evaluate the guarantee liability based upon the success of the project and assuming no payments are made under the guarantee the Company will have a gain for $1.9 million when the loan is paid in full. Borrower may prepay a portion of the unpaid principal to satisfy such tests.

(9) Concentrations.

The mining royalty lands segment has a total of five tenants currently leasing mining locations and one lessee that accounted for 22.3% of the Company’s consolidated revenues during the six months ended June 30, 2022, and $385,000 of accounts receivable at June 30, 2022. The termination of these lessees’ underlying leases could have a material adverse effect on the Company. The Company places its cash and cash equivalents with Wells Fargo Bank and First Horizon Bank. At times, such amounts may exceed FDIC limits.

(10) Fair Value Measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 means the use of quoted prices in active markets for identical assets or liabilities. Level 2 means the use of values that are derived principally from or corroborated by observable market data. Level 3 means the use of inputs are those that are unobservable and significant to the overall fair value measurement.

At June 30, 2022, the Company was invested in U.S. Treasury notes valued at $140,883,000 maturing in late 2022 through 2024. The unrealized loss on these investments of $1,699,000 was recorded as part of comprehensive income and based on the market value (Level 1).

At June 30, 2022 and 2021, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents including U.S. Treasury notes was adjusted to fair value as described above.

The fair values of the Company’s other mortgage notes payable were estimated based on current rates available to the Company for debt of the same remaining maturities. At June 30, 2022, the carrying amount and fair value of such other long-term debt was $180,070,000 and $152,988,000, respectively. At June 30, 2021, the carrying amount and fair value of such other long-term debt was $178,334,000 and $175,625,000, respectively.

(11) Investments in Joint Ventures.

The Company has investments in joint ventures, primarily with other real estate developers. Joint ventures where FRP is not the primary beneficiary are reflected in the line “Investment in joint ventures” on the balance sheet and “Equity in loss of joint ventures” on the income statement. The assets of these joint ventures are restricted to use by the joint ventures and their obligations can only be settled by their assets or additional contributions by the partners.

The following table summarizes the Company’s Investments in unconsolidated joint ventures (in thousands):

								The
								Company's
								Share of Profit
	Common			Total	Total Assets of	Profit (Loss)		(Loss) of the
	Ownership			Investment	The Partnership	Of the Partnership		Partnership (1)

As of June 30, 2022
Brooksville Quarry, LLC	50.00	%	$	7,546	14,461	(42	)	(21	)
BC FRP Realty, LLC	50.00	%		5,485	22,115	(90	)	(45	)
Bryant Street Partnerships	61.36	%		58,253	203,480	(4,787	)	(3,186	)
Aberdeen Station Loan				917	917	—		—
DST Hickory Creek	26.65	%		6,000	45,186	(271	)	171
Amber Ridge Loan				6,234	6,234	—		—
1800 Half St. Owner, LLC	61.37	%		39,112	119,957	—		(64	)
Greenville/Woodfield Partnerships	40.00	%		16,108	92,947	(563	)	(225	)
Total			$	139,655	505,297	(5,753	)	(3,370	)
								The
								Company's
								Share of Profit
	Common			Total	Total Assets of	Profit (Loss)		(Loss) of the
	Ownership			Investment	The Partnership	Of the Partnership		Partnership (1)

As of December 31, 2021
Brooksville Quarry, LLC	50.00	%	$	7,488	14,301	(82	)	(41	)
BC FRP Realty, LLC	50.00	%		5,530	22,470	(230	)	(115	)
Riverfront Holdings II, LLC ⁽¹⁾				—	—	(760	)	(628	)
Bryant Street Partnerships	61.36	%		59,558	204,082	(6,084	)	(4,954	)
Aberdeen Station Loan				514	514	—		—
DST Hickory Creek	26.65	%		6,000	46,048	(481	)	343
Amber Ridge Loan				11,466	11,466	—		—
1800 Half St. Owner, LLC	61.37	%		38,693	93,932	12		20
Greenville/Woodfield Partnerships	40.00	%		16,194	87,731	(948	)	(379	)
Total			$	145,443	480,544	(8,573	)	(5,754	)

(1):

Riverfront Holdings II, LLC was consolidated on March 31, 2021. Bryant Street Partnerships included $234,000 in 2021 for the Company’s share of preferred interest and $236,000 in 2022 and $236,000 in the first half of 2021 for amortization of guarantee liability related to the Bryant Street loan.

The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of June 30, 2022 are summarized in the following two tables (in thousands):


	As of June 30, 2022										Total
	Riverfront		Bryant Street		DST Hickory		1800 Half St.		Greenville/		Apartment/
	Holdings II, LLC		Partnership		Creek		Partnership		Woodfield		Mixed Use

Investments in real estate, net	$	0		195,633		43,124		119,311		92,149	$	450,217
Cash and cash equivalents		0		2,831		579		646		466		4,522
Unrealized rents & receivables		0		4,859		1,181		0		14		6,054
Deferred costs		0		157		302		0		318		777
Total Assets	$	0		203,480		45,186		119,957		92,947	$	461,570

Secured notes payable	$	0		128,697		29,360		47,128		51,148	$	256,333
Other liabilities		0		3,077		144		11,876		3,402		18,499
Capital - FRP		0		54,814		4,179		37,414		15,359		111,766
Capital – Third Parties		0		16,892		11,503		23,539		23,038		74,972
Total Liabilities and Capital	$	0		203,480		45,186		119,957		92,947	$	461,570


	As of June 30, 2022
	Brooksville		BC FRP		Aberdeen		Amber Ridge		Apartment/		Grand
	Quarry, LLC		Realty, LLC		Loan		Loan		Mixed Use		Total

Investments in real estate, net	$	14,279		21,305		917		6,234		450,217	$	492,952
Cash and cash equivalents		178		224		0		0		4,522		4,924
Unrealized rents & receivables		0		431		0		0		6,054		6,485
Deferred costs		4		155		0		0		777		936
Total Assets	$	14,461		22,115		917		6,234		461,570	$	505,297

Secured notes payable	$	0		11,093		0		0		256,333	$	267,426
Other liabilities		42		164		0		0		18,499		18,705
Capital - FRP		7,546		5,429		917		6,234		111,766		131,892
Capital - Third Parties		6,873		5,429		0		0		74,972		87,274
Total Liabilities and Capital	$	14,461		22,115		917		6,234		461,570	$	505,297

The Company’s capital recorded by the unconsolidated Joint Ventures is $7,764,000 less than the Investment in Joint Ventures reported in the Company’s consolidated balance sheet due primarily to capitalized interest.

The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of December 31, 2021 are summarized in the following two tables (in thousands):


	As of December 31, 2021										Total
	Riverfront		Bryant Street		DST Hickory		1800 Half St.		Greenville/		Apartment/
	Holdings II, LLC		Partnership		Creek		Partnership		Woodfield		Mixed Use

Investments in real estate, net	$	0		199,730		43,840		93,504		87,421	$	424,495
Cash and cash equivalents		0		1,123		827		428		279		2,657
Unrealized rents & receivables		0		2,925		1,044		0		5		3,974
Deferred costs		0		304		337		0		26		667
Total Assets	$	0		204,082		46,048		93,932		87,731	$	431,793

Secured notes payable	$	0		119,201		29,337		18,404		44,309	$	211,251
Other liabilities		0		9,066		115		14,470		4,462		28,113
Capital - FRP		0		57,555		4,423		37,478		15,584		115,040
Capital – Third Parties		0		18,260		12,173		23,580		23,376		77,389
Total Liabilities and Capital	$	0		204,082		46,048		93,932		87,731	$	431,793


	As of December 31, 2021
	Brooksville		BC FRP		Aberdeen		Amber Ridge		Apartment/		Grand
	Quarry, LLC		Realty, LLC		Loan		Loan		Mixed Use		Total

Investments in real estate, net	$	14,281		21,561		514		11,466		424,495	$	472,317
Cash and cash equivalents		18		312		0		0		2,657		2,987
Unrealized rents & receivables		0		368		0		0		3,974		4,342
Deferred costs		2		229		0		0		667		898
Total Assets	$	14,301		22,470		514		11,466		431,793	$	480,544

Secured notes payable	$	0		11,384		0		0		211,251	$	222,635
Other liabilities		0		140		0		0		28,113		28,253
Capital - FRP		7,488		5,473		514		11,466		115,040		139,981
Capital - Third Parties		6,813		5,473		0		0		77,389		89,675
Total Liabilities and Capital	$	14,301		22,470		514		11,466		431,793	$	480,544

The amount of consolidated retained earnings (accumulated deficit) for these joint ventures was $(11,400,000) and

$(8,942,000) as of June 30, 2022 and December 31, 2021, respectively.

The income statements of the Bryant Street Partnerships are as follows (in thousands):


	Bryant Street			Bryant Street			Bryant Street			Bryant Street
	Partnerships			Partnerships			Partnerships			Partnerships
	Total JV			Total JV			Company Share			Company Share
	Six Months ended			Six Months ended			Six Months ended			Six Months ended
	June 30,			June 30,			June 30,			June 30,
	2022			2021			2022			2021
Revenues:
Rental Revenue	$	4,018		$	180		$	2,465			$	111
Revenue – other		733			77			450				47
Total Revenues		4,751			257			2,915				158

Cost of operations:
Depreciation and amortization		3,260			776			2,000				476
Operating expenses		2,523			1,117			1,548				686
Property taxes		578			119			355				73
Total cost of operations		6,361			2,012			3,903				1,235

Total operating loss		(1,610	)		(1,755	)		(988	)			(1,077	)
Interest expense		(3,177	)		(655	)		(2,198	)			(1,130	)

Net loss before tax	$	(4,787	)	$	(2,410	)	$	(3,186	)		$	(2,207	)

The income statements of the Greenville Woodfield Riverside Partnership are as follows (in thousands):


	Woodfield			Woodfield
	Riverside Partnership			Riverside Partnership
	Total JV			Company Share
	Six Months ended			Six Months ended
	June 30,			June 30,
	2022			2022
Revenues:
Rental Revenue	$	1,335		$	534
Revenue – other		86			34
Total Revenues		1,421			568

Cost of operations:
Depreciation and amortization		765			306
Operating expenses		601			240
Property taxes		317			127
Total cost of operations		1,683			673

Total operating loss		(262	)		(105	)
Interest expense		(301	)		(120	)

Net loss before tax	$	(563	)	$	(225	)

(12) Consolidation of Riverfront Investment Partners II, LLC. Riverfront Holdings II, LLC.

On May 4, 2018, the Company and MRP Realty formed a Joint Venture to develop the second phase of the four phase master development known as Riverfront on the Anacostia in Washington, D.C. The purpose of the Joint Venture is to develop and own a 250,000-square-foot mixed-use development which supports 264 residential units and 6,937 square feet of retail. The Company contributed land with an agreed to value of $16,300,000 (cost basis of $4.6 million) and $6.2 million of cash to the Joint Venture for an 80% stake in the venture. MRP contributed capital of $5.6 million to the joint venture including development costs paid prior to formation of the joint venture and a $725,000 development fee. The Company further agreed to fund $13.75 million preferred equity financing at 7.5% interest rate all of which was advanced and repaid with interest in March 2021. The Company’s equity interest in the joint venture was previously accounted for under the equity method of accounting as MRP acts as the administrative agent of the joint venture and oversees and controls the day-to-day operations of the project.

In March 2021, Phase II (The Maren) reached stabilization. Stabilization in this case means 90% of the individual apartments have been leased and are occupied by third party tenants. Upon reaching stabilization, the Company has, for a period of one year, the exclusive right to (i) cause the joint venture to sell the property or (ii) cause the Company’s and MRP’s percentage interests in the joint venture to be adjusted so as to take into account the contractual payouts assuming a sale at the value of the development at the time of this “Conversion election”.

Reaching stabilization results in a change of control for accounting purposes as the veto rights of the minority shareholder lapsed and the Company became the primary beneficiary. As such, beginning March 31, 2021, the Company consolidated the assets (at fair value), liabilities and operating results of the joint venture. This consolidation resulted in a gain on remeasurement of investment in real estate partnership of $51,139,000 of which $13,965,000 was attributed to the noncontrolling interest. In accordance with the terms of the Joint Venture agreements, the Company used the fair value amount at date of conversion and calculated an adjusted ownership under the Conversion election. As such for financial reporting purposes effective March 31, 2021, the Company ownership is based upon this substantive profit sharing arrangement and is 70.41% on a prospective basis as agreed to by FRP and MRP.

Maren consolidation at stabilization


	As of March 31, 2021
	Riverfront			Gain on
	Holdings II, LLC			Remeasurement		Revised

Land	$	6,472		$	22,858	$	29,330
Building and improvements, net		87,269			23,531		110,800
Project under construction		258			—		258
Value of leases in place		—			4,750		4,750
Cash		3,704			—		3,704
Cash held in escrow		336			—		336
Accounts receivable		707			—		707
Prepaid expenses		197			—		197
Total Assets	$	98,943		$	51,139	$	150,082

Long-term Debt	$	88,000		$	—	$	88,000
Amortizable debt costs		(1,072	)		—		(1,072	)
Other liabilities		441			—		441
Equity – FRP		7,026			37,174		44,200
Equity - MRP		4,548			13,965		18,513
Total Liabilities and Capital	$	98,943		$	51,139	$	150,082

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our annual report on Form 10-K. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described in “Forward-Looking Statements” below and “Risk Factors” on page 5 of our annual report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this quarterly report on Form 10-Q, unless required by law.

The following discussion includes a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission to supplement the financial results as reported in accordance with GAAP. The non-GAAP financial measure discussed is net operating income (NOI). The Company uses this metric to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. This measure is not, and should not be viewed as, a substitute for GAAP financial measures. Refer to “Non-GAAP Financial Measure” below in this quarterly report for a more detailed discussion, including reconciliations of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

Business Overview - FRP Holdings, Inc. is a real estate development, asset management and operating company businesses. Our properties are located in the Mid-Atlantic and southeastern United States and consist of:

Lands leased to mining companies, some of which will have second lives as development properties;

Residential apartments in Washington, D.C., Greenville, South Carolina and Richmond, Virginia;

Warehouse or office properties in the Mid-Atlantic states either existing or under development;

Mixed use properties under development in Washington, D.C. or Greenville, South Carolina; and

Properties held for sale.

We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to focus on our core business activity of real estate development, asset management and operations. We are developing a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. We do not anticipate immediate benefits from investments. Timing of projects may be subject to delays caused by factors beyond our control.

Reportable Segments

We conduct primarily all of our business in the following four reportable segments: (1) asset management (2) mining royalty lands (3) development and (4) stabilized joint ventures. For more information regarding our reportable segments, see Note 3. Business Segments of our condensed consolidated financial statements included in this quarterly report.

Asset Management Segment.

The Asset Management segment owns, leases and manages commercial properties. These assets create revenue and cash flows through tenant rental payments, lease management fees and reimbursements for building operating costs. The Company’s industrial warehouses typically lease for terms ranging from 3 – 10 years often with 1 or 2 renewal options. All base rent revenue is recognized on a straight-lined basis. All of the commercial warehouse leases are triple net and common area maintenance costs (CAM Revenue) are billed monthly, and insurance and real estate taxes are billed annually. 34 Loveton is the only office product wherein all leases are full service therefore there is no CAM revenue. Office leases are also recognized on a straight-lined basis. The major cash outlays incurred in this segment are for operating expenses, real estate taxes, building repairs, lease commissions and other lease closing costs, construction of tenant improvements, capital to acquire existing operating buildings and closing costs related thereto and personnel costs of our property management team.

As of June 30, 2022, the Asset Management Segment owned four commercial properties in fee simple as follows:

1) 34 Loveton Circle in suburban Baltimore County, Maryland consists of one office building totaling 33,708 square feet which is 95.1% occupied (16% of the space is occupied by the Company for use as our Baltimore headquarters). The property is subject to commercial leases with various tenants.

2) 155 E. 21^st Street in Duval County, Florida was an office building property that remains under lease through March 2026. We permitted the tenant to demolish all structures on the property during 2018.

3) Cranberry Run Business Park in Hartford County, Maryland consists of five office buildings totaling 267,737 square feet which are 100% leased and occupied. The property is subject to commercial leases with various tenants.

4) Hollander 95 Business Park in Baltimore City, Maryland consists of two buildings totaling 145,590 square feet that were completed in the fourth quarter of 2021and are 69.1% leased and 52.8% occupied.

Management focuses on several factors to measure our success on a comparative basis in this segment. The major factors we focus on are (1) net operating income growth, (2) growth in occupancy, (3) average annual occupancy rate (defined as the occupied square feet at the end of each month during a fiscal year divided by the number of months to date in that fiscal year as a percentage of the average number of square feet in the portfolio over that same time period), (4) tenant retention success rate (as a percentage of total square feet to be renewed), (5) building and refurbishing assets to meet Class A and Class B institutional grade classifications, and (6) reducing complexities and deferred capital expenditures to maximize sale price.

Mining Royalty Lands Segment.

Our Mining Royalty Lands segment owns several properties comprising approximately 16,650 acres currently under lease for mining rents or royalties (excluding the 4,280 acres owned by our Brooksville joint venture with Vulcan Materials). Other than one location in Virginia, all of these properties are located in Florida and Georgia. The Company leases land under long-term leases that grant the lessee the right to mine and sell reserves from our property in exchange for royalty payments. A typical lease has an option to extend the lease for additional terms. The typical lease in this segment requires the tenant to pay us a royalty based on the number of tons of mined materials sold from our property during a given fiscal year multiplied by a percentage of the average annual sales price per ton sold. As a result of this royalty payment structure, we do not bear the cost risks associated with the mining operations, however, we are subject to the cyclical nature of the construction markets in these states as both volumes and prices tend to fluctuate through those cycles. In certain locations, typically where the reserves on our property have been depleted but the tenant still has a need for the leased land, we collect a minimum annual rental amount. We believe strongly in the potential for future growth in construction in Florida, Georgia, and Virginia which would positively benefit our profitability in this segment. In the fiscal year ended December 31, 2021, a total of 8 million tons were mined.

The major expenses in this segment are comprised of collection and accounting for royalties, management’s oversight of the mining leases, land entitlement for post-mining uses and property taxes at our non-leased locations and at our Grandin location which, unlike our other leased mining locations, are not entirely paid by the tenant. As such, our costs in this business are very low as a percentage of revenue, are relatively stable and are not affected by increases in production at our locations. Our current mining tenants include Vulcan Materials, Martin Marietta, Cemex, Argos and The Concrete Company.

Additionally, these locations provide us with opportunities for valuable “second lives” for these assets through proper land planning and entitlement.

Significant “2^nd life” Mining Lands:

Location	Acreage	Status
Brooksville, FL	4,280 +/-	Development of Regional of Impact and County Land Use and Master Zoning in place for 5,800 residential unit, mixed-use development
Ft. Myers, FL	1,907 +/-	Approval in place for 105, 1 acre, waterfront residential lots after mining completed.
Total	6,187 +/-

Development Segment.

Through our Development segment, we own and are continuously monitoring for their “highest and best use” several parcels of land that are in various stages of development. Our overall strategy in this segment is to convert all our non-income producing lands into income production through (i) an orderly process of constructing new commercial and residential buildings for us to own and operate or (ii) a sale to, or joint venture with, third parties. Additionally, our Development segment will purchase or form joint ventures on new developments of land not previously owned by the Company.

Revenues in this segment are generated predominately from land sales and interim property rents. The significant cash outlays incurred in this segment are for land acquisition costs, entitlement costs, property taxes, design and permitting, the personnel costs of our in-house management team and horizontal and vertical construction costs.

Development Segment – Warehouse/Office Land.

At June 30, 2022, this segment owned the following development parcels:

Six acres of horizontally developed land at Hollander Business Park in Baltimore, City, Maryland with one 101,750 square feet industrial build-to-suit currently under construction.

55 acres of land that will be capable of supporting over 690,000 square feet of industrial product located at 1001 Old Philadelphia Road in Aberdeen, Maryland.

17 acres of land in Harford County, Maryland that will support 258,545 square feet of industrial development.

We also have three properties that were either spun-off to us from Florida Rock Industries in 1986 or acquired by us from unrelated third parties. These properties, as a result of our “highest and best use” studies, are being prepared for income generation through sale or joint venture with third parties, and in certain cases we are leasing these properties on an interim basis for an income stream while we wait for the development market to mature.

Development Segment - Significant Investment Lands Inventory:

Location	Approx. Acreage	Status	NBV
Riverfront on the Anacostia Phases III-IV	2.5	Conceptual design program ongoing	$6,166,000
Hampstead Trade Center, MD	118	Residential zoning applied for in preparation for sale	$9,968,000
Square 664E, on the Anacostia River in DC	2	Under lease to Vulcan Materials as a concrete batch plant through 2026	$7,594,000
Total	122.5		$23,728,000

Development Segment - Investments in Joint Ventures

The third leg of our Development Segment consists of investments in joint ventures for properties in development. The Company has investments in joint ventures, primarily with other real estate developers which are summarized below:

Property	JV Partner	Status	% Ownership
Brooksville Quarry, LLC near Brooksville, Florida	Vulcan Materials Company	Future planned residential development of 3,500 acres which are currently subject to mining lease	50%
BC FRP Realty, LLC for 35 acres in Maryland	St John Properties	Development of 329,000 square feet multi-building business park in progress	50%
Bryant Street Partnerships for 5 acres of land in Washington, D.C.	MRP Realty	Mixed-use development with 487 residential units and 91,661 square feet of retail partially completed	61.36%
Aberdeen Station residential development in Harford County, Maryland		$31.1 million in exchange for an interest rate of 10% and a 20% preferred return after which the Company is also entitled to a portion of proceeds from sale	Financing
Amber Ridge residential development in Prince George’s County, Maryland		$18.5 million in exchange for an interest rate of 10% and a preferred return of 20% after which the Company is also entitled to a portion of proceeds from sale	Financing
1800 Half Street property in Buzzard Point area of Washington, D.C.	MRP Realty	Construction underway on ten-story structure with 344 apartments and 8,356 square feet of ground floor retail	61.37%
.408 Jackson property in Greenville, SC	Woodfield Development	Construction underway on mixed-use project with 227 multifamily units and 4,539 square feet of retail space began in May 2020	40%
Riverside property 1430 Hampton Avenue, Greenville, SC	Woodfield Development	Construction underway on 200-unit apartment project began in February 2020	40%

Joint ventures where FRP is not the primary beneficiary are reflected in the line “Investment in joint ventures” on the balance sheet and “Equity in loss of joint ventures” on the income statement. The following table summarizes the Company’s investments in unconsolidated joint ventures (in thousands):

								The
								Company's
								Share of Profit
	Common			Total	Total Assets of	Profit (Loss)		(Loss) of the
	Ownership			Investment	The Partnership	Of the Partnership		Partnership (1)

As of June 30, 2022
Brooksville Quarry, LLC	50.00	%	$	7,546	14,461	(42	)	(21	)
BC FRP Realty, LLC	50.00	%		5,485	22,115	(90	)	(45	)
Bryant Street Partnerships	61.36	%		58,253	203,480	(4,787	)	(3,186	)
Aberdeen Station Loan				917	917	—		—
DST Hickory Creek	26.65	%		6,000	45,186	(271	)	171
Amber Ridge Loan				6,234	6,234	—		—
1800 Half St. Owner, LLC	61.37	%		39,112	119,957	—		(64	)
Greenville/Woodfield Partnerships	40.00	%		16,108	92,947	(563	)	(225	)
Total			$	139,655	505,297	(5,753	)	(3,370	)

The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of June 30, 2022, are summarized in the following two tables (in thousands):

	As of June 30, 2022										Total
	Riverfront		Bryant Street		DST Hickory		1800 Half St.		Greenville/		Apartment/
	Holdings II, LLC		Partnership		Creek		Partnership		Woodfield		Mixed Use

Investments in real estate, net	$	0		195,633		43,124		119,311		92,149	$	450,217
Cash and cash equivalents		0		2,831		579		646		466		4,522
Unrealized rents & receivables		0		4,859		1,181		0		14		6,054
Deferred costs		0		157		302		0		318		777
Total Assets	$	0		203,480		45,186		119,957		92,947	$	461,570

Secured notes payable	$	0		128,697		29,360		47,128		51,148	$	256,333
Other liabilities		0		3,077		144		11,876		3,402		18,499
Capital - FRP		0		54,814		4,179		37,414		15,359		111,766
Capital – Third Parties		0		16,892		11,503		23,539		23,038		74,972
Total Liabilities and Capital	$	0		203,480		45,186		119,957		92,947	$	461,570

	As of June 30, 2022
	Brooksville		BC FRP		Aberdeen		Amber Ridge		Apartment/		Grand
	Quarry, LLC		Realty, LLC		Loan		Loan		Mixed Use		Total

Investments in real estate, net	$	14,279		21,305		917		6,234		450,217	$	492,952
Cash and cash equivalents		178		224		0		0		4,522		4,924
Unrealized rents & receivables		0		431		0		0		6,054		6,485
Deferred costs		4		155		0		0		777		936
Total Assets	$	14,461		22,115		917		6,234		461,570	$	505,297

Secured notes payable	$	0		11,093		0		0		256,333	$	267,426
Other liabilities		42		164		0		0		18,499		18,705
Capital - FRP		7,546		5,429		917		6,234		111,766		131,892
Capital - Third Parties		6,873		5,429		0		0		74,972		87,274
Total Liabilities and Capital	$	14,461		22,115		917		6,234		461,570	$	505,297

Stabilized Joint Venture Segment.

Currently the segment includes three stabilized joint ventures which own, lease and manage buildings. These assets create revenue and cash flows through tenant rental payments, and reimbursements for building operating costs. The Company’s residential spaces generally lease for 12 – 15-month lease terms and 90 days prior to the expiration, as long as there is no balance due, the tenant is offered a renewal. If no notice to move out or renew is made, then the leases go to month to month until notification of termination or renewal is received. Renewal terms are typically 9 – 12 months. From March 2020 through the end of 2021, we were prohibited from increasing rent on renewals by emergency measures in Washington, DC designed to ease the burden of the pandemic on its citizens. These measures expired at the end of 2021. The Company also leases retail spaces at apartment/mixed-use properties. The retail leases are typically 10 -15-year leases with options to renew for another 5 years. Retail leases at these properties also include percentage rents which average 3-6% of annual sales for the tenant that exceed a breakpoint stipulated by each individual lease. All base rent revenue is recognized on a straight-line basis. The major cash outlays incurred in this segment are for property taxes, full service maintenance, property management, utilities and marketing. The three stabilized joint venture properties are as follows:

Property and Occupancy	JV Partner	Method of Accounting	% Ownership
Dock 79 apartments Washington, D.C. 305 apartment units and 14,430 square feet of retail	MRP Realty	Consolidated	66%
The Maren apartments Washington, D.C. 264 residential units and 6,758 square feet of retail	MRP Realty	Consolidated as of March 31, 2021	70.41%
DST Hickory Creek 294 apartment units in Henrico County, MD	Capital Square	Cost Method	26.6%

Second Quarter Operational Highlights

Dock 79 ended the reporting period with average residential occupancy above 95% for the fifth straight quarter

7.33% increase on renewals at Dock 79

Best second quarter of revenue for mining royalties in segment’s history

55.1% increase in Asset Management Revenue versus same period last year

16.0% increase in NOI ($6.94 million vs $5.98 million) compared to same period last year

Comparative Results of Operations for the Three months ended June 30, 2022 and 2021

Consolidated Results

(dollars in thousands)		Three Months Ended June 30,
	2022				2021			Change			%
Revenues:
Lease Revenue	$		6,745		$	5,861		$	884			15.1	%
Mining lands lease revenue			2,883			2,634			249			9.5	%
Total Revenues			9,628			8,495			1,133			13.3	%

Cost of operations:
Depreciation/Depletion/Amortization			2,868			4,388			(1,520	)		-34.6	%
Operating Expenses			1,541			1,394			147			10.5	%
Property Taxes			1,041			1,000			41			4.1	%
Management company indirect			805			822			(17	)		-2.1	%
Corporate Expense			1,307			1,050			257			24.5	%
Total cost of operations			7,562			8,654			(1,092	)		-12.6	%

Total operating profit (loss)			2,066			(159	)		2,225			-1399.4	%

Net investment income			1,120			1,048			72			6.9	%
Interest Expense			(739	)		(446	)		(293	)		65.7	%
Equity in loss of joint ventures			(1,766	)		(1,118	)		(648	)		58.0	%
Gain on sale of real estate			—			805			(805	)		-100.0	%
Income before income taxes			681			130			551			423.8	%
Provision for (benefit from) income taxes			99			(151	)		250			-165.6	%

Net income			582			281			301			107.1	%
Gain (loss) attributable to noncontrolling interest			(75	)		199			(274	)		-137.7	%
Net income attributable to the Company	$		657		$	82		$	575			701.2	%

Net income for the second quarter of 2022 was $657,000 or $.07 per share versus $82,000 or $.01 per share in the same period last year. The second quarter of 2022 was impacted by the following items:

The quarter includes $152,000 amortization expense compared to $1,868,000 in the same quarter last year of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture.
Interest expense increased $293,000 compared to the same quarter last year due to capitalizing less interest due to the lower amount of in-house and joint venture projects under development.
Equity in loss of Joint Ventures increased $648,000 primarily due to increased depreciation and amortization at our joint ventures due to buildings placed in service.
The same quarter last year included $805,000 for an easement and sale of excess land in the Mining Royalty Lands Segment.

Asset Management Segment Results

	Three months ended June 30
(dollars in thousands)	2022		%			2021			%			Change			%

Lease revenue	$	912		100.0	%		588			100.0	%		324			55.1	%

Depreciation, depletion and amortization		230		25.2	%		134			22.8	%		96			71.6	%
Operating expenses		111		12.2	%		74			12.6	%		37			50.0	%
Property taxes		52		5.7	%		42			7.1	%		10			23.8	%
Management company indirect		100		10.9	%		210			35.7	%		(110	)		-52.4	%
Corporate expense		225		24.7	%		288			49.0	%		(63	)		-21.9	%

Cost of operations		718		78.7	%		748			127.2	%		(30	)		-4.0	%

Operating profit (loss)	$	194		21.3	%		(160	)		-27.2	%		354			-221.3	%

Total revenues in this segment were $912,000, up $324,000 or 55.1%, over the same period last year. Operating profit was $194,000, up $354,000 from an operating loss of $(160,000) in the same quarter last year. Operating profit is up primarily because Cranberry Run is now 100% leased and occupied compared to 77.6% leased and 59.7% occupied at the end of the same quarter last year. Revenues are up because of Cranberry Run as well as the addition of our two most recent spec buildings at Hollander Business Park which were under construction during the same period last year.

Mining Royalty Lands Segment Results

	Three months ended June 30
(dollars in thousands)	2022		%			2021		%			Change		%

Mining lands lease revenue	$	2,883		100.0	%		2,634		100.0	%		249		9.5	%

Depreciation, depletion and amortization		189		6.6	%		58		2.2	%		131		225.9	%
Operating expenses		17		0.6	%		12		0.5	%		5		41.7	%
Property taxes		69		2.4	%		68		2.6	%		1		1.5	%
Management company indirect		110		3.8	%		96		3.6	%		14		14.6	%
Corporate expense		148		5.1	%		108		4.1	%		40		37.0	%

Cost of operations		533		18.5	%		342		13.0	%		191		55.8	%

Operating profit	$	2,350		81.5	%		2,292		87.0	%		58		2.5	%

Total revenues in this segment were $2,883,000 versus $2,634,000 in the same period last year. Total operating profit

in this segment was $2,350,000, an increase of $58,000 versus $2,292,000 in the same period last year. This increase is primarily the result of the additional royalties from the acquisition in Astatula, FL which we completed at the beginning of this quarter.

Development Segment Results

	Three months ended June 30
(dollars in thousands)	2022			2021			Change

Lease revenue	$	408			451			(43	)

Depreciation, depletion and amortization		47			53			(6	)
Operating expenses		80			45			35
Property taxes		356			364			(8	)
Management company indirect		506			400			106
Corporate expense		816			522			294

Cost of operations		1,805			1,384			421

Operating loss	$	(1,397	)		(933	)		(464	)

With respect to ongoing projects:

We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.” Of the $18.5 million in committed capital to the project, $16.8 million in principal draws have taken place to date. Through the end of the first half of 2022, 99 of the 187 units have been sold, and we have received $13,040,000 in preferred interest and principal to date.
Bryant Street is a mixed-use joint venture between the Company and MRP in Washington, DC consisting of four buildings, The Coda, The Chase 1A, The Chase 1B, and one commercial building 90% leased to an Alamo Draft House movie theater. At quarter end, the Coda was 96.75% leased and 95.45% occupied, The Chase 1B was 85.71% leased and 78.26% occupied, and The Chase 1A was 72.67% leased and 62.79% occupied. In total, at quarter end, Bryant Street’s 487 residential units were 84.6% leased and 78.2% occupied. Its commercial space was 82.5% leased and 69.2% occupied at quarter end.
We began construction on our 1800 Half Street joint venture project, now known as The Verge, at the end of August 2020. We expect the building to be complete in the third quarter of 2022. As of the end of the second quarter, the project was 91.34% complete. This is our third mixed use project in the Anacostia waterfront submarket in Washington, DC.
Leasing began on Riverside in the third quarter 2021 and the building was 97% leased and 91% occupied at the end of the quarter. .408 Jackson is our second joint venture project in Greenville and is currently under construction. This project is 94.09% complete and we expect to complete construction and begin leasing in fourth quarter of 2022.

Stabilized Joint Venture Segment Results

	Three months ended June 30
(dollars in thousands)	2022		%			2021			%			Change			%

Lease revenue	$	5,425		100.0	%		4,822			100.0	%		603			12.5	%

Depreciation, depletion and amortization		2,402		44.3	%		4,143			85.9	%		(1,741	)		-42.0	%
Operating expenses		1,333		24.6	%		1,263			26.2	%		70			5.5	%
Property taxes		564		10.4	%		526			10.9	%		38			7.2	%
Management company indirect		89		1.6	%		116			2.4	%		(27	)		-23.3	%
Corporate expense		118		2.2	%		132			2.8	%		(14	)		-10.6	%

Cost of operations		4,506		83.1	%		6,180			128.2	%		(1,674	)		-27.1	%

Operating profit (loss)	$	919		16.9	%		(1,358	)		-28.2	%		2,277			-167.7	%

Total revenues in this segment were $5,425,000, an increase of $603,000 versus $4,822,000 in the same period last year. The Maren’s revenue was $2,457,000 and Dock 79 revenues increased $307,000. Total operating profit in this segment was $919,000 an increase of $2,277,000 versus an operating loss of $(1,358,000) in the same period last year. Net Operating Income this quarter for this segment was $3,533,000, up $496,000 or 16.3% compared to the same quarter last year.

At the end of June, The Maren was 93.93% leased and 96.21% occupied. Average residential occupancy for the quarter was 95.34%, and 65.38% of expiring leases renewed with an average rent increase on renewals of 4.60%. The Maren is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 70.41% ownership.

Dock 79’s average residential occupancy for the quarter was 96.39%, and at the end of the quarter, Dock 79’s residential units were 94.8% leased and 94.1% occupied. This quarter, 60.78% of expiring leases renewed with an average rent increase on renewals of 7.33%. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

Second quarter distributions from our CS1031 Hickory Creek DST investment were $86,000.

Six Months Operational Highlights

34.7% increase in asset management revenue versus first six months of last year

Highest six-month total of mining royalties revenue in segment’s history

65.52% renewal rate at Dock 79 with 6.41% increase on renewals through first six months

24.0% increase in NOI ($12.67 million vs $10.22 million) compared to first six months last year

Comparative Results of Operations for the Six months ended June 30, 2022 and 2021

Consolidated Results

(dollars in thousands)		Six Months Ended June 30,
	2022				2021			Change			%
Revenues:
Lease Revenue	$		13,027		$	9,399		$	3,628			38.6	%
Mining lands lease revenue			5,308			4,949			359			7.3	%
Total Revenues			18,335			14,348			3,987			27.8	%

Cost of operations:
Depreciation/Depletion/Amortization			5,766			5,831			(65	)		-1.1	%
Operating Expenses			3,349			2,235			1,112			49.8	%
Property Taxes			2,069			1,778			291			16.4	%
Management company indirect			1,579			1,392			187			13.4	%
Corporate Expense			2,142			1,829			313			17.1	%
Total cost of operations			14,905			13,065			1,840			14.1	%

Total operating profit			3,430			1,283			2,147			167.3	%

Net investment income			2,018			2,423			(405	)		-16.7	%
Interest Expense			(1,477	)		(1,371	)		(106	)		7.7	%
Equity in loss of joint ventures			(3,370	)		(2,753	)		(617	)		22.4	%
Gain on remeasurement of investment in real estate partnership			—			51,139			(51,139	)		-100.0	%
Gain on sale of real estate			733			805			(72	)		-8.9	%
Income before income taxes			1,334			51,526			(50,192	)		-97.4	%
Provision for income taxes			348			10,370			(10,022	)		-96.6	%

Net income			986			41,156			(40,170	)		-97.6	%
Gain (loss) attributable to noncontrolling interest			(343	)		12,701			(13,044	)		-102.7	%
Net income attributable to the Company	$		1,329		$	28,455		$	(27,126	)		-95.3	%

Net income attributable to the Company for the first half of 2022 was $1,329,000 or $.14 per share versus $28,455,000 or $3.03 per share in the same period last year. The first half of 2022 was impacted by the following items:

The period includes $468,000 amortization expense compared to $1,868,000 in the same period last year of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture.
The period includes $733,000 gain on sales of excess property at Brooksville while the same quarter last year included $805,000 for a Grandin easement and sale of Brooksville excess land.
Interest income decreased $405,000 due to bond maturities and the repayment of the Company’s preferred interest in The Maren upon the building’s refinancing.
Equity in loss of Joint Ventures increased $617,000 primarily due to increased depreciation and amortization at our joint ventures due to buildings placed in service.

Net income for the first half of 2021 included a gain of $51.1 million on the remeasurement of investment in The Maren real estate partnership, which is included in Income before income taxes. This gain on remeasurement was mitigated by a $10.1 million provision for taxes and $14.0 attributable to noncontrolling interest.

Asset Management Segment Results

	Six months ended June 30
(dollars in thousands)	2022		%			2021			%			Change			%

Lease revenue	$	1,751		100.0	%		1,300			100.0	%		451			34.7	%

Depreciation, depletion and amortization		464		26.5	%		271			20.8	%		193			71.2	%
Operating expenses		279		15.9	%		213			16.4	%		66			31.0	%
Property taxes		105		6.0	%		80			6.2	%		25			31.3	%
Management company indirect		192		11.0	%		377			29.0	%		(185	)		-49.1	%
Corporate expense		369		21.1	%		502			38.6	%		(133	)		-26.5	%

Cost of operations		1,409		80.5	%		1,443			111.0	%		(34	)		-2.4	%

Operating profit (loss)	$	342		19.5	%		(143	)		-11.0	%		485			-339.2	%

Total revenues in this segment were $1,751,000, up $451,000 or 34.7%, over the same period last year. Operating profit was $342,000, up $485,000 from an operating loss of $(143,000) in the same period last year.

Mining Royalty Lands Segment Results

	Six months ended June 30
(dollars in thousands)	2022		%			2021		%			Change		%

Mining lands lease revenue	$	5,308		100.0	%		4,949		100.0	%		359		7.3	%

Depreciation, depletion and amortization		244		4.6	%		123		2.5	%		121		98.4	%
Operating expenses		32		0.6	%		23		0.5	%		9		39.1	%
Property taxes		134		2.5	%		131		2.6	%		3		2.3	%
Management company indirect		217		4.1	%		178		3.6	%		39		21.9	%
Corporate expense		242		4.6	%		189		3.8	%		53		28.0	%

Cost of operations		869		16.4	%		644		13.0	%		225		34.9	%

Operating profit	$	4,439		83.6	%		4,305		87.0	%		134		3.1	%

Total revenues in this segment were $5,308,000 versus $4,949,000 in the same period last year. Total operating profit in this segment was $4,439,000, an increase of $134,000 versus $4,305,000 in the same period last year.

Development Segment Results

	Six months ended June 30
(dollars in thousands)	2022			2021			Change

Lease revenue	$	791			768			23

Depreciation, depletion and amortization		92			106			(14	)
Operating expenses		291			71			220
Property taxes		711			727			(16	)
Management company indirect		996			661			335
Corporate expense		1,337			941			396

Cost of operations		3,427			2,506			921

Operating loss	$	(2,636	)		(1,738	)		(898	)

Stabilized Joint Venture Segment Results

	Six months ended June 30
(dollars in thousands)	2022		%			2021			%			Change			%

Lease revenue	$	10,485		100.0	%		7,331			100.0	%		3,154			43.0	%

Depreciation, depletion and amortization		4,966		47.4	%		5,331			72.7	%		(365	)		-6.8	%
Operating expenses		2,747		26.2	%		1,928			26.3	%		819			42.5	%
Property taxes		1,119		10.7	%		840			11.5	%		279			33.2	%
Management company indirect		174		1.6	%		176			2.4	%		(2	)		-1.1	%
Corporate expense		194		1.8	%		197			2.7	%		(3	)		-1.5	%

Cost of operations		9,200		87.7	%		8,472			115.6	%		728			8.6	%

Operating profit (loss)	$	1,285		12.3	%		(1,141	)		-15.6	%		2,426			-212.6	%

In March 2021, we reached stabilization on Phase II (The Maren) of the development known as RiverFront on the Anacostia in Washington, D.C. As such, as of March 31, 2021, the Company consolidated the assets (at current fair value based on appraisal), liabilities and operating results of the joint venture. Up through the first quarter of the prior year, accounting for The Maren was reflected in Equity in loss of joint ventures on the Consolidated Statements of Income. Starting April 1, 2021, all the revenue and expenses are accounted for in the same manner as Dock 79 in the stabilized joint venture segment.

Total revenues in this segment were $10,485,000, an increase of $3,154,000 versus $7,331,000 in the same period last year. The Maren’s revenue was $4,866,000 and Dock 79 revenues increased $450,000. Total operating profit in this segment was $1,285,000, an increase of $2,426,000 versus an operating loss of $(1,141,000) in the same period last year. Net Operating Income for this segment was $6,670,000, up $2,099,000 or 45.92% compared to the same period last year. All of these increases over the first six months last year are primarily due to the Maren’s consolidation into this segment in March 31, 2021.

The Maren’s average residential occupancy for the first six months of 2022 was 95.24%, and 63.53% of expiring leases renewed with an average rent increase on renewals of 3.69%. The Maren is a joint venture between the

Company and MRP, in which FRP Holdings, Inc. is the majority partner with 70.41% ownership.

Dock 79’s average residential occupancy for the first six months of 2022 was 95.79%. Through the first six months of the year, 65.52% of expiring leases renewed with a 6.41% increase on renewals. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

Distributions from our CS1031 Hickory Creek DST investment were $171,000 for the first six months of the year.

Liquidity and Capital Resources. The growth of the Company’s businesses requires significant cash needs to acquire and develop land or operating buildings and to construct new buildings and tenant improvements. As of June 30, 2022, we had $159,262,000 of cash and cash equivalents. As of June 30, 2022, we had no debt borrowed under our $20 million Wells Fargo revolver, $506,000 outstanding under letters of credit and $19,494,000 available to borrow under the revolver. On March 19, 2021, the Company refinanced Dock 79 and The Maren projects pursuant to separate Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association of America, LLC. Dock 79 and The Maren borrowed principal sums of $92,070,000 and $88,000,000 respectively, in connection with the refinancing.

Cash Flows - The following table summarizes our cash flows from operating, investing and financing activities for each of the periods presented (in thousands of dollars):

	Six months
	Ended June 30,
	2022			2021
Total cash provided by (used for):
Operating activities	$	8,807			10,963
Investing activities		(9,950	)		52,438
Financing activities		(1,116	)		844
Increase (decrease) in cash and cash equivalents	$	(2,259	)		64,245

Outstanding debt at the beginning of the period		178,409			89,964
Outstanding debt at the end of the period		178,483			178,334

Operating Activities - Net cash provided by operating activities for the six months ended June 30, 2022 was $8,807,000 versus $10,963,000 in the same period last year. In the prior year the Gain on remeasurement of investment in real estate partnership and related deferred income taxes were both non-cash adjustments to net income to arrive at net cash provided by operating activities.

Investing Activities - Net cash used in investing activities for the six months ended June 30, 2022 was $9,950,000 versus cash provided by investing activities of $52,438,000 in the same period last year. The $62 million decrease was primarily due to a $10.6 million increase in the purchase of property, $38.2 million decrease on maturities and sales of our corporate bond portfolio, a $10.4 million decrease on the return of our preferred equity financing with the prior year including interest of $16.1 million from The Maren, and the prior year including $3.7 million for cash on the books of The Maren upon consolidation.

Financing Activities – Net cash used in investing activities was $1,116,000 versus cash provided of $844,000 in the same period last year primarily due to the prior year refinancing of Dock 79 for $1.4 million more net of debt issuance costs than the amount matured.

Credit Facilities - On February 6, 2019, the Company entered into a First Amendment to the 2015 Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, N.A. (Wells Fargo”). The Credit Agreement modifies the Company’s prior Credit Agreement with Wells Fargo, dated January 30, 2015. The Credit Agreement establishes a five-year revolving credit facility with a maximum facility amount of $20 million. The interest rate under the Credit Agreement will be a maximum of 1.50% over Daily 1-Month LIBOR, which may be reduced quarterly to 1.25% or 1.0% over Daily 1-Month LIBOR if the Company meets a specified ratio of consolidated total debt to consolidated total capital. A commitment fee of 0.25% per annum is payable quarterly on the unused portion of the commitment but the amount may be reduced to 0.20% or 0.15% if the Company meets a specified ratio of consolidated total debt to consolidated total capital. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of June 30, 2022, these covenants would have limited our ability to pay dividends to a maximum of $246 million combined.

Cash Requirements – The Company currently expects its capital expenditures for the remainder of 2022 to include approximately $36.4 million for real estate including investments in joint ventures, which will be funded mostly out of cash and investments on hand, cash generated from operations and property sales, or borrowings under our credit facilities.

Impact of the COVID-19 Pandemic. We have continued operations throughout the pandemic and have made every effort to act in accordance with national, state, and local regulations and guidelines. During 2020, Dock 79 and The Maren most directly suffered the impacts to our business from the pandemic due to our retail tenants being unable to operate at capacity, the lack of attendance at the Washington Nationals baseball park and the rent freeze imposed by the District. In 2021, the Delta and Omicron variants of the virus impacted our businesses, but because of the vaccine and efforts to reopen the economy, while still affected, they were not impacted to the extent that they were in 2020. Bryant Street has continued to experience the impact of the pandemic as result of low ridership on the DC Metro, easy access to which was one of the principal features/amenities of the development. It is possible that this version of the virus and its succeeding variants may impact our ability to lease retail spaces in Washington, D.C. and Greenville. We expect our business to be affected by the pandemic for as long as government intervention and regulation is required to combat the threat.

Summary and Outlook. Royalty revenue for the quarter was up 9.44% versus the same period last year and revenue for the first six months increased 7.26% versus the same period the year before. This is the highest second-quarter revenue total in this segment’s history, the highest six-month revenue total in the segment’s history, and the first time we have ever eclipsed $5 million in revenue in the first six months (or any six-month period). As mentioned previously, this jump in revenue is primarily the result of the acquisition we completed at the beginning of this quarter of a new mining royalty property in Astatula, FL. The additional royalties along with increased infrastructure spending and pressure on supply should continue to help push price and volumes and drive this segment forward.

This is the first full quarter where we have had the ability to raise rents on renewals at Dock 79 and the Maren. Both properties performed well with 65.38% of expiring leases at the Maren renewing with an average increase of 4.60%, and 60.78% of expiring leases at Dock 79 renewing with an average of 7.33%. When we could not renew an existing residential lease and instead signed a new tenant, we saw in increase in rent on these “trade-outs” of 11.75% at Dock 79 and 10.58% at The Maren. Dock 79 experienced the effects of the rent freeze to a greater extent than the Maren, so it is not surprising that a return to market rents has had a greater effect on its renewal increases as well as these trade-

outs. Increased inflation has also played a part in driving these increases. However, we believe that this also speaks to the demand these assets generate in a competitive market and confirms our “long” position in this submarket with these assets as well as the ones we have in our development pipeline.

Demand for industrial space remains high and Asset Management’s performance this quarter speaks to that. Cranberry Run is 100% leased and occupied for the second straight quarter and as a result achieved first six-month revenues 34.19% higher than last year. Our other two properties (our home office in Maryland and Vulcan’s former Jacksonville office) remain essentially unchanged and fully leased. As to the immediate future of this segment, we anticipate shell completion of our final building at Hollander by the end of 2022. This 101,750 square foot warehouse is a build-to-suit with a 10-year lease, which will positively impact revenue, operating profit, and NOI for some time.

Looking back on the first six months, the numbers speak to both organic growth in all our income producing segments as well as the benefit of two full quarters of a stabilized and consolidated Maren. The one major headwind in our income statement is the increase in equity in loss in joint venture. This is both a function of the equity method of accounting and the nature of our multifamily assets prior to stabilization. What one line item encompassing several properties simply cannot tell you, and perhaps where an NOI number is more illustrative, is how we are incrementally growing the value of this Company. Development and lease-up are always going to be expensive and a damper on earnings, and, good, bad, or indifferent, are simply the price you pay for future income and cashflow. We count ourselves extremely fortunate to have a shareholder base that can see the big picture and understands what we are building towards.

We have several meaningful events and milestones heading our way with what remains of the year: the stabilization of both Bryant Street; stabilization and permanent financing for Riverside; completion of construction on and the commencement of leasing for both .408 Jackson in Greenville and The Verge in Washington, DC. We are working diligently to conservatively convert our existing cash into new investments, cautiously optimistic as ever, but ever mindful of our duty to be responsible stewards of your capital.

Non-GAAP Financial Measure.

To supplement the financial results presented in accordance with GAAP, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measure included in this quarterly report is net operating income (NOI). FRP uses this non-GAAP financial measure to analyze its operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. This measure is not, and should not be viewed as, a substitute for GAAP financial measures.

Net Operating Income Reconciliation
Six months ended 06/30/22 (in thousands)
						Stabilized
	Asset					Joint			Mining		Unallocated		FRP
	Management		Development			Venture			Royalties		Corporate		Holdings
	Segment		Segment			Segment			Segment		Expenses		Totals
Net Income (loss)	$	249		(3,351	)		(92	)		3,758		422		986
Income Tax Allocation		93		(1,242	)		92			1,393		12		348
Income (loss) before income taxes		342		(4,593	)		—			5,151		434		1,334

Less:
Unrealized rents		196		—			—			105		—		301
Gain on sale of real estate		—		—			—			733		—		733
Equity in gain of Joint Ventures		—		—			171			—		—		171
Interest income		—		1,563			—			—		455		2,018
Plus:
Unrealized rents		—		—			51			—		—		51
Equity in loss of Joint Ventures		—		3,520			—			21		—		3,541
Interest Expense		—		—			1,456			—		21		1,477
Depreciation/Amortization		464		92			4,966			244		—		5,766
Management Co. Indirect		192		996			174			217		—		1,579
Allocated Corporate Expenses		369		1,337			194			242		—		2,142

Net Operating Income (loss)	$	1,171		(211	)		6,670			5,037		—		12,667

Net Operating Income Reconciliation
Six months ended 06/30/21 (in thousands)
							Stabilized
	Asset						Joint		Mining		Unallocated		FRP
	Management			Development			Venture		Royalties		Corporate		Holdings
	Segment			Segment			Segment		Segment		Expenses		Totals
Net Income (loss)	$	(123	)		(1,629	)		38,591		3,731		586		41,156
Income Tax Allocation		(46	)		(604	)		9,601		1,383		36		10,370
Income (loss) before income taxes		(169	)		(2,233	)		48,192		5,114		622		51,526

Less:
Gain on remeasurement of real estate investment		—			—			51,139		—		—		51,139
Gain on investment land sold		—			—			—		831		—		831
Unrealized rents		11			—			—		113		—		124
Interest income		—			1,779			—		—		644		2,423
Plus:
Unrealized rents		—			—			8		—		—		8
Loss on sale of land		26			—			—		—		—		26
Equity in loss of Joint Venture		—			2,274			457		22		—		2,753
Interest Expense		—			—			1,349		—		22		1,371
Depreciation/Amortization		271			106			5,331		123		—		5,831
Management Co. Indirect		377			661			176		178		—		1,392
Allocated Corporate Expenses		502			941			197		189		—		1,829

Net Operating Income (loss)	$	996			(30	)		4,571		4,682		—		10,219

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Interest Rate Risk - We are exposed to the impact of interest rate changes through our variable-rate borrowings under our Credit Agreement with Wells Fargo.

Under the Wells Fargo Credit Agreement, the applicable margin for borrowings at June 30, 2022 was Daily 1-Month LIBOR plus 1.0%. The applicable margin for such borrowings will be increased in the event that our debt to capitalization ratio as calculated under the Wells Fargo Credit Agreement Facility exceeds a target level.

The Company did not have any variable rate debt at June 30, 2022, so a sensitivity analysis was not performed to determine the impact of hypothetical changes in interest rates on the Company’s results of operations and cash flows.

ITEM 4. CONTROLS AND PROCEDURES

CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

The Company also maintains a system of internal accounting controls over financial reporting that are designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving the desired control objectives.

As of June 30, 2022, the Company, under the supervision and with the participation of the Company's management, including the CEO, CFO and CAO, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on this evaluation, the Company’s CEO, CFO and CAO concluded that the Company's disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be included in periodic SEC filings.

There have been no changes in the Company’s internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. PURCHASES OF EQUITY SECURITIES BY THE ISSUER

						(c)
						Total
						Number of
						Shares		(d)
						Purchased		Approximate
		(a)				As Part of		Dollar Value of
		Total		(b)		Publicly		Shares that May
		Number of		Average		Announced		Yet Be Purchased
		Shares		Price Paid		Plans or		Under the Plans
Period		Purchased		per Share		Programs		or Programs (1)
	April 1 through April 30		—	$	—		—	$	9,363,000

	May 1 through May 31		—	$	—		—	$	9,363,000

	June 1 through June 30		—	$	—		—	$	9,363,000

	Total		—	$	—		—

(1)

On February 4, 2015, the Board of Directors authorized management to expend up to $5,000,000 to repurchase shares of the Company’s common stock from time to time as opportunities arise. On December 5, 2018, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization. On August 5, 2019, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization. On May 6, 2020, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization. On August 26, 2020, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization.

Item 6. EXHIBITS

(a)

Exhibits. The response to this item is submitted as a separate Section entitled "Exhibit Index", on page 38.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		FRP Holdings, Inc.


Date: August 12, 2022	By	JOHN D. BAKER II
		John D. Baker II
		Chief Executive Officer
		(Principal Executive Officer)


	By	JOHN D. BAKER III
		John D. Baker III.
		Treasurer and Chief Financial Officer
		(Principal Financial Officer)


	By	JOHN D. KLOPFENSTEIN
		John D. Klopfenstein
		Controller and Chief Accounting
		Officer (Principal Accounting Officer)

FRP HOLDINGS, INC.

FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 30, 2022

EXHIBIT INDEX

(31)(a)	Certification of John D. Baker II.
(31)(b)	Certification of John D. Baker III.
(31)(c)	Certification of John D. Klopfenstein.
(32)	Certification of Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

101.XSD	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104.	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)